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Court of Appeals
G.R. No. L-78519/26 September
1989
Petition for Review on Certiorari
Victoria Yau Chu (assisted by her
husband, Michael) petitioners
Court of Appeals, Family Savings
Bank,
and/or
CAMS
Trading
Enterprises, Inc. respondents
Victoria bought cement from CAMS
and secured her payments with
deeds of assignment over her time
deposits in Family Savings Bank.
She assigned about P320K worth
but her obligations to CAMS came
up
to
about
P404K.
CAMS
requested the bank to encash the
time deposit certificates, which the
bank did only after calling up and
obtaining
Victorias
consent.
Victoria then sued the bank and
CAMS
for
alleged
pactum
commissorium. The Court ruled
against her, as the prohibition on
pactum
commissorium
was
enacted in order to protect debtors
from creditors who automatically
appropriate pledged or mortgaged
property, which might have a
higher value than the debt. Where
the security for the debt is also
money deposited in a bank, the
amount of which is even less than
the debt, it is not illegal for the
creditor to encash the time deposit
certificates to pay the debtors
overdue
obligation,
with
the
latters consent.
Facts: